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Corruption Watch: June 13, 2005

13 June 2005, Volume 5, Number 5
The information revolution has spawned a global industry of private intelligence services. Some members of the U.S. Congress have recently asked whether their activities should be regulated.

The rapidly growing private intelligence and security industry has become a multibillion-dollar business. It can be roughly divided into two sectors:

* those that deal with security threats and provide intelligence and security in combat-related operations;

* those that provide companies with vital intelligence needed to expand business and avoid unnecessary pitfalls in an emerging marketplace. These companies also collect data on private citizens, which is often sold to companies wishing to market their products or those in the business of guarding airports and other vital national infrastructure from terrorist attack.

Threat To Privacy

Some members of the U.S. Congress are worried that the unregulated spread of private intelligence agencies could constitute a threat to privacy rights enjoyed by U.S. citizens.

In a statement dated 22 February 2003 (, U.S. Senator Patrick Leahy (Democrat, Vermont) cautioned his colleagues that the case of ChoicePoint Inc. -- a private U.S.-based company that inadvertently sold 145,000 personal and financial records of Americans to conmen posing as legitimate businessmen -- is an indication that "new technologies, new private-public domestic security partnerships, and the rapid rise of giant information brokers...have all combined to produce powerful new threats to privacy."

According to "The Washington Post" on 20 January, ChoicePoint has contracts with the Justice Department and the Central Intelligence Agency (CIA) to provide public records online.

The paper reported that: "ChoicePoint and other private companies increasingly occupy a special place in homeland security and crime-fighting efforts, in part because they can compile information and use it in ways government officials sometimes cannot because of privacy and information laws."

Leahy has pointed out that databases of giant information companies contain billions of records on individuals "that include sensitive information such as financial, travel, medical, and insurance data."

"Very little is known about the integrity and handling of this information, and there are insufficient rules and oversight to protect public privacy," Leahy said.

Private Spies

Immune from parliamentary oversight committees and many restrictions governing their activities, private security and intelligence services are being hired by intelligence agencies for myriad tasks.

Often run by prominent former spies, these privately owned companies present themselves as an alternative source of information gathering and offer other special services.

The U.S. State Department lists 29 private companies doing business in Iraq. Among them are such companies as:

* AKE Limited is based out of the United Kingdom and is described on the State Department's website ( as a company that offers "Hostile regions training, twice-weekly Iraq Security Briefings, private intelligence, and security reports."

* Meyer & Associates from Texas offers "Security consulting and problem resolution...intelligence, transportation...threat assessment, kidnap negotiations, investigations, reporting, analysis, liaison with government, diplomatic, military, local and guerilla leaders."

* The Overseas Security & Strategic Information, Inc/Safenet, based in Atlanta, Georgia, provides: "threat and intelligence reporting" and claims that its approach "is responsive, personalized, and cost-effective."

These and other companies working in Iraq have government contracts to provide intelligence reports, man security posts for government facilities in the country, debrief prisoners, serve as translators in jails, and guard oil pipelines from sabotage. Many employees of these companies have been killed by Iraqi insurgent or terrorist attacks.

According to an article on the Corporate Watch website ( on 7 March: "50 percent of the $40 billion given annually to the 15 intelligence agencies in the United States is now spent on private contractors."


One such private intelligence company is Athena, a subsidiary of the Israeli-based Merkhav Group. Athena, which has offices in the United States, Greece, and Israel, is headed by ex-Mossad head Shabtai Shavit. His former subordinate, Yossi Maiman, is the head of Merkhav and is considered by many to be one of the most influential men in Israel -- and Turkmenistan.

Athena promotes its services in a brochure available on the Internet titled "Intelligence From Open Sources" where it says that: "Intelligence is no longer reserved solely for government and state organizations. Today's terror attacks have brought about an awareness of the need for advanced information. Public and private organizations can now perform a self-assessment of their vulnerability and the security risks posed by terrorism."

Athena is very clear in its understanding of the world of intelligence: "Intelligence, until the end of the 80s, was a subject dealt with by governments and nations. It brought with it connotations of military and state security issues. Companies and private people dealt with information -- not with intelligence. During the 90s, more and more corporations developed the concept of business and industrial intelligence as a competitive tool."

While such companies as Athena claim to gather information only from open sources, there is always the danger of companies straying beyond such self-imposed restrictions and gaining access to nonpublic, confidential sources in order to satisfy clients. How such sources are tapped can become a delicate matter and in certain circumstances privacy laws could be violated.

The question facing lawmakers is what to do if any of these private intelligence services become "rogue elephants" and -- inadvertently or not -- sell their information to criminals or terrorists. RK

Globalization of the world's economic and information infrastructure is shaping a new organized criminal elite. And while the organized criminal gangs of the second half of the 20th century have not disappeared, they are preparing to follow the money and adjust to the economic/regional transformations of the new century.

Many law enforcement agencies in the United States predict that illegal schemes will become increasingly far-reaching -- both geographically and otherwise -- and that criminals, more of whom seem to enjoy some measure of government protection, will become better able to cover their tracks with a bewildering array of shell companies and legal entities established as front companies for transnational criminal activities. Even the term "organized crime" is rapidly being replaced by "organized global crime."

This is how the U.S. National Intelligence Council (NIC) described the coming criminal threat in its "Global Trends 2015" report issued in December 2000: "Disaffected states, terrorists, proliferators, narcotraffickers, and organized criminals will take advantage of the new high-speed information environment and other advances in technology to integrate their illegal activities and compound their threat to stability and security around the world."

That report, however, appeared prior to the 11 September 2001 attack on the World Trade Center and the Pentagon. The impact that event had on the U.S. government's analytical thinking is evident in the follow-up report issued by the NIC four years later, "Mapping the Global Future" in December 2004.

While maintaining the basic premise of the 2000 report -- that advances in technology will help determine the future parameters of organized crime -- the newer "Mapping the Global Future" report cautions of the dangers of organized crime teaming up with terrorism.

"We expect that the relationship between terrorists and organized criminals will remain primarily a matter of business, i.e., that terrorists will turn to criminals who can provide forged documents, smuggled weapons, or clandestine travel assistance when the terrorists cannot procure these goods and services on their own," the 2005 report's authors write. "Organized criminal groups, however, are unlikely to form long-term strategic alliances with terrorists. Organized crime is motivated by the desire to make money and tends to regard any activity beyond that required to effect profit as bad for business. For their part, terrorist leaders are concerned that ties to non-ideological partners will increase the chance of successful police penetration or that profits will seduce the faithful."

Eurasian Crime

In keeping with the emerging pattern of globalization that is driven by economic growth in Asia and the failure of Russian authorities to fight organized crime effectively, Russian organized crime (ROC) gangs are expected to network with their Asian counterparts and form Eurasian criminal groupings.

Currently the most important international organized crime groups are the mafias (Sicilian, American, and Russian), the Japanese "yakuza," the Colombian drug cartels of Medellin and Cali, and the Chinese triads.

In India, organized crime has made serious inroads into cybercrime and is involved in major money laundering operations through the control of hawalas, the informal banking system, common in Asia and the Middle East.

According to the Institute on Peace and Conflict Studies (found on the web at, "According to Mumbai Police records, hawala (money laundering) transactions averaged more than Rs. 30,000 crores ($6.25 billion) a year in the 1990s." The Institute further claims that "there are reportedly 700 legislators, including 40 Members of Parliament, with criminal antecedents. More than forty-seven percent of the representatives in local self-governments in Maharashtra have criminal backgrounds."

The Chinese Fuk Ching gang, which runs many organized-crime operations in the United States and whose members often come from Fukien Province in China, is among the best known of the Chinese gangs. And while experts claim that Chinese organized-crime gangs do not cooperate readily among themselves and that there is no "Chinese Mafia" as such, Russian experts claim that Russian organized-crime gangs in the Russian Far East have established some links to local Chinese gangs.

In the early 1990s, the FBI established a Eurasian Organized Crime unit in order to deal with the increased volume of criminal activity in the region. Some sources in the FBI have suggested that this unit is seriously understaffed so that more agents can work in counterterrorism and that the remaining staff is having difficulty dealing with counterparts in Eurasia, who the sources say tend to be less than cooperative.

'Elite Networks'

In the "Crime Pattern Analysis" for 2002-03 published by the National Police Agency of the Netherlands, reference is made to "elite networks" as the ascendant danger facing European law enforcement. The example provided in the report is that of a number of Russian's suspected of criminal activities seeking to buy legitimate businesses in the metal and energy markets in the Netherlands.

These "elite networks" consist of criminals with high-level contacts within government and regulatory structures throughout Europe and in Russia who are able to influence decision makers to their benefit and to the detriment of the normal commercial process.

"Mapping the Global Future" points out: "Some organized crime syndicates will form loose alliances with one another. They will attempt to corrupt leaders of unstable, economically fragile, or failing states, insinuate themselves into troubled banks and businesses, exploit information technologies, and cooperate with insurgent movements to control substantial geographic areas."

Earlier "elite network" examples were the BCCI and Bank of New York scandals, in which billions of dollars were allegedly stolen, then laundered by members of the political and economic elite of various countries. The scope of these scams was so great that investigations are still ongoing and the end is not in sight. These two scandals were soon followed by the disappearance of some $4 billion of International Monetary Fund (IMF) financing in Russia, which has also never been solved.

Organized Crime And WMD

The NIC report touches on the possible relationship between organized crime and Weapons of Mass Destruction: "If governments in countries with WMD capabilities lose control of their inventories, the risk of organized crime trafficking in nuclear, biological, or chemical weapons will increase between now and 2020."

Revelations in 2003 of a network of Pakistani scientists selling nuclear-weapons secrets constituted in the eyes of many law-enforcement agencies a criminal "perfect storm." How plausible would it be for a similar group to repeat this type of operation by selling such information to an organized-crime group is anyone's guess. Are law-enforcement agencies able to prevent such a sale, given the problems of communications, varying jurisdictions, and their poor record of exchange of information?

"Mapping the Global Future" writes: "Organized crime groups usually do not want to see governments toppled but thrive in countries where governments are weak, vulnerable to corruption, and unable or unwilling to consistently enforce the rule of law.

"Criminal syndicates, particularly drug trafficking syndicates, may take virtual control of regions within failing states to which the central government cannot extend its writ."

New Ways To Profit

For years, Italian organized crime has been involved in garbage-disposal schemes, which have earned them millions of dollars. In the past five years, these criminal organizations have infiltrated the hazardous-waste-disposal business in the former Soviet Union -- where local officials, under pressure to dispose of chemical and biological waste, were bribed to sign contracts with dubious firms who then took the hazardous waste and disposed of it without any precautions.

"The Times" of London reported on 9 August 2004 that criminal gangs were making "up to 2.5 billion euros each year" on illegal-waste disposal in Italy alone, adding that almost half of the 80 million tons of waste produced annually is believed to be handled by organized crime.

In many countries, bottled water already costs more than petroleum; as potable-water supplies diminish and demand grows, criminals could insert themselves into this highly lucrative business, thereby influencing agricultural production as well as drinking supplies.

The NIS "Global Trends 2015" report predicted that by 2015, nearly half of the world's population would live in "water stressed" countries, creating huge opportunities for global crime groups.

Slow Response By Law Enforcement?

A United Nations workshop on organized crime (the proceedings of which can be found at noted in April 2005 that: "crime was traditionally treated as a local or national issue, and investigation and prosecution of crime was long considered to be confined within national enforcement is one of the more visible and intrusive forms of the exercise of political sovereignty, States have traditionally been reluctant to cooperate with foreign law enforcement agencies."

Unless this attitude is changed soon, many of the NIC's forecasts might indeed prove warranted by 2015. RK